ACT NO 43/1999 ON TEMPORARY REIMBURSEMENTS IN RESPECT OF FILM MAKING IN ICELAND
Objectives & scope
The objective of this Act is to contribute to the furtherance of domestic culture and the promotion of Iceland's history and natural surroundings through temporary support for film and television programmes produced in Iceland.
Authorisation is granted for the reimbursement from the Treasury of a proportion of the production costs incurred in the production of films and television programmes in Iceland. The calculation of the reimbursement is based on the total cost of producing films or television programmes, irrespective of which part of the production generates that cost.
If more than 80% of the total cost of producing a film or television programme is incurred in Iceland, the reimbursement shall be based on the total production cost incurred in the European Economic Area.
Production costs refers to all expense that is incurred in Iceland and is eligible for deduction from operating revenues pursuant to the Income Tax Act, although see Article 5(a). Wages and payments to independent contractors are only considered production costs if they are verifiably taxed in Iceland.
Applications for reimbursement of production costs shall be sent to the Committee on Reimbursement for Film Production; cf. Paragraph 2. Applications for reimbursement, together with accompanying documents, shall be received before production begins in Iceland.
The Minister shall appoint a Committee on Reimbursement for Film Production, to which the Minister in charge of film and the Minister in charge of Government finances shall each appoint one representative, and the third member shall be appointed without nomination and shall chair the Committee. Alternates shall be appointed in the same manner. The chairman shall have the deciding vote in the event of a tie.
The Committee provided for in Paragraph 2 shall review applications for reimbursement. If the Committee considers an application to have satisfied the conditions for reimbursement for film production, it shall provide the applicant with a pledge of reimbursement; otherwise, it shall reject the application.
Conditions for reimbursement
The following conditions shall be satisfied when an assessment is made of whether a portion of the production costs of a film or television programme shall be reimbursed:
- the production concerned is conducive to advancing Icelandic culture, promoting Icelandic history or natural environment, or enhancing the experience, expertise, and artistic ambitions of the parties involved;
- that the production concerned satisfies the conditions for culture and production laid down in regulations that shall be issued by the Minister, in accordance with Article 8.
- the accounting and settlement for each project is clearly segregated from other projects so that it is always possible to identify the costs associated with each project individually;
- information on the main parties to the production of the film or television programme has been made available;
- information on domestic parties and their share in the production of the film or television programme has been made available;
- an itemised estimate of production costs and financing has been made available, together with confirmation from financing agents and a report from the applicant verifying that the production is consistent with the objectives of the Act;
- information on the subject of the proposed film or television project, such as a script and information on filming locations, has been made available;
- information on how public distribution will be handled has been made available;
- the subject of the film or television programme is not in violation of legislation on monitoring the access of children to films and computer games, or the provisions of the General Penal Code on pornography;
- there are no taxes or levies in arrears to the State or local authorities or any other unpaid claims in Iceland in connection with the production;
Should there be a change in the estimated production costs (cf. Paragraph 1, Item (f)) after production commences, a new cost estimate shall be submitted to the Committee on Reimbursement for Film Production.
In assessing applications for reimbursement, the Committee described in Article 3 shall be authorised to obtain an expert opinion on the conditions for the reimbursement.
Advertisements and news material, short films, recordings of athletic and entertainment events, material intended primarily for the promotion of specific goods or services, and material intended primarily for showing in own distribution networks shall not qualify for reimbursement pursuant to this Act.
In the event that the production of film or television programme is not completed within three years from the date the pledge is granted for reimbursement pursuant to Article 3, the approval shall lapse. Under extraordinary circumstances, the Committee on Reimbursement for Film Production provided for in Article 3 may grant an exemption from this condition for a maximum period of five years from the date the pledge was granted.
When showing film product that has been granted reimbursement pursuant to this Act, it must state that the production has received a grant from the Icelandic government, as further explained in regulations that shall be issued by the Minister, in accordance with Article 8.
Those who have been granted reimbursement shall provide Business Iceland with access to promotional material relating to the project, free of charge, so that it can be used for marketing purposes. They must inform of restrictions that may be on the use of promotional material.
The reimbursement of production costs shall equal 25% of total production costs pursuant to Article 2 and Article 5(a).
Paragraph 1 notwithstanding, the rate of reimbursement of production costs shall be 35% of production costs according to Article 2 and Article 5 a. for production projects that meet all the following conditions:
1. Production costs incurred in the production of the motion picture or television material concerned in this country must be a minimum of ISK 350 million.
2. The project in question must have a minimum of 30 working days in Iceland, either consisting of actual film production (shooting) days or defined post-production working days. Of the 30 working days a minimum of 10 shooting days in Iceland is however always required.
3. The number of staff working directly on the project shall be 50 at a minimum and this work shall amount to 50 working days. It is a requirement that both salary and payments to employees and contractors, shall be taxed in Iceland.
Requests for disbursement shall be submitted to the Committee on Reimbursement; the Committee shall determine the reimbursement pursuant to Article 3. If the request is received after six months have passed from the end of the production of the film or television programme, the request shall be denied. The end of production is considered to be no later than at the premiere. In the case of the production of the television programme, the end of production is considered to be at the premiere of the last episode in a single series.
Reimbursements are subject to the condition that the applicant maintain records of the costs for which reimbursement is requested, in accordance with the Accounting Act. If the company falls under the provisions of the Annual Accounts Act, the company‘s financial statements shall be in accordance with its provisions.
If the reimbursement amounts to an amount less than ISK 3 million, the applicant‘s board of directors and managing director shall confirm that the settlement of costs is in compliance with the provisions of this Act and regulations issued on the basis of it. If the reimbursement exceeds ISK 3 million, the project‘s settlement of costs shall be attested by an auditor, who shall also attest, together with the applicant‘s board of directors and managing director, that the settlement is in compliance with this Act and regulations issued on the basis of it.
In verifying the applicant‘s settlement of costs, the Committee referenced in Article 3 may request appropriate information from the tax authorities and from the company‘s accounts. If the settlement of costs and/or the supporting documents are unsatisfactory, the Committee shall grant the applicant a grace period for the submittal of satisfactory data. If the Committee does not receive satisfactory data by the specified deadline, or if the data in the case indicate that the settlement of costs is not in compliance with the provisions of this Act, it shall reject the request for reimbursement.
Article 5 (A)
Production costs that create a basis for the reimbursement
Production costs that create a basis for the reimbursement shall be regarded as expenses that:
a. may be deducted from revenues deriving from commercial activities according to the provisions of the Income Tax Act;
b. are incurred in Iceland in the production of films and television programmes or, depending on circumstances, in another European Economic Area member state, as well as Greenland and the Faroe Islands, in accordance with Article 2(2); and
c. relating to the preparatory period, primary production period or post-production period.
Production costs shall be filed in the applicant‘s financial accounting. Notwithstanding the first Paragraph, the following costs are not regarded as part of the base for reimbursement:
a. costs incurred after the production is completed pursuant to Article 5(2);
b. costs paid to parties who are not liable to pay tax in Iceland, whether as wages, contractor payments or payments for services provided or purchases of goods, although see Article 2(2);
c. purchases or depreciation of tangible assets or property that relate to the production;
d. costs, including indirect administrative costs, share in operating expenses or contribution to the producer, that are estimated as a proportion of the turnover of a parent company, should the production be conducted by the subsidiary;
e. registered costs on the basis of accounts between parties that relate to the production or due to the utilisation of equipment and facilities that are not at market value;
f. fines or payments of public levies or taxes.
Means of appeal
The decision of the Committee on Reimbursement for Film Production pursuant to Articles 3 and 5 may be appealed to the Ministry; cf. Article 26, Paragraph 1 of the Administrative Procedures Act.
The decision of the Committee concerning what is considered to be production costs pursuant to Article 2, Paragraph 3 and Article 5(a); the amount of the reimbursement; or what is considered to be the total production costs may be appealed to the State Internal Revenue Board.
The deadline for an appeal pursuant to Paragraphs 1 and 2 is 30 days, calculated from the date of the decision by the Committee on Reimbursement for Film Production.
If the applicant has received a grant from public entities for the production of the same film or television programme, the amount of the grant shall be deducted from the amount considered domestic production costs.
The combined amount of grants from public entities and the total amount of the reimbursement pursuant to Article 5 shall not exceed 85% of the total production costs of the same film or television programme.
The Minister shall issue a Regulation concerning the implementation of this Act. It shall contain provisions on, among other things, the procedures for reimbursements pursuant to this Act; the authorisations of the Committee on Reimbursement for Film Production to defer reimbursements that may be in excess of the funding allocated by Parliament at any given time; the conditions for reimbursements; segregation of accounts pursuant to Article 4, Paragraph 1, Item(c); applications; handling of applications; conditions for culture and production pursuant to Article 4(1)(b), grant arrangements pursuant to Article 4(6), requirements as regards the attesting by an auditor on the basis of Article 5(5); and decisions on reimbursements.
Entry into force
This Act shall enter into force at once. The Act shall expire on 31 December 2025. Reimbursements approved before that data shall remain in effect, however.